Despite setbacks, Uber expands to Jerusalem

The company is continuing its loss-leading strategy in Jerusalem, offering all Jerusalem riders two free rides of up to NIS 50 during its first five days of operation.

By
May 11, 2015 20:05
2 minute read.
Uber

Uber. (photo credit: REUTERS)

Uber, the taxi app that has quickly conquered the world and has a reported value of $50 billion, is expanding its operations in Israel to include Jerusalem, despite setbacks in the local market.

In August, the San Francisco-based company launched in Tel Aviv, where it went head-to-head with home - grown cab app GetTaxi, now known as Gett. Although Gett only operates in a handful of cities, half of them in Israel, Uber has had a tough time undoing its grip on the Israeli market.

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The rivalry has gotten so tough that Gett CEO Shahar Waiser said, “Uber has failed in Israel.”

Uber has used its financial might to offer deeply dis - counted rides. In Tel Aviv, it offered its drivers a favor - able deal and gave a flat-out 30-percent discount to all its passengers for the first few months. It also offered plenty of other promotions, such as discounted rides in its UberXL vans, free trips to and from the polls on election day and hummus delivery services on Independence Day.

The company is continu - ing its loss-leading strategy in Jerusalem, offering all Jerusalem riders two free rides of up to NIS 50 during its first five days of operation, which kicks off May 18 on Jerusalem Day.

“After lowering the cost of travel, increasing safety and increasing the driving conditions in the Dan region, we are happy to expand to Jeru - salem and are planning in the future to come to additional cities throughout the country,” Uber Israel CEO Yoni Greifman said.

For Uber, however, the real prize is not in competing with Gett in the field of cabs on demand. Its particular advantage will come in the form of its ride-sharing feature, UberX, which lets ordinary drivers turn their cars into makeshift on-demand cabs, just as AirBnB lets people turn their spare rooms into hotel rooms for visiting guests. The ride-sharing arrangement is often far cheaper than cabs because drivers do not have to get expensive taxi licenses and undergo a long training course.

Unfortunately for Uber, it is illegal for anyone without a taxi license to accept money for rides, a law it is hoping to change. As in other countries, cab unions have pushed back forcefully. In Germany, a court banned the company’s ride-sharing altogether, while cabbies across Europe went on strike last summer to protest the fierce competition.

In Israel, Uber has gotten around the law for the sake of a one-day promotion by figuring out a clever loophole: Giving UberX rides for free didn’t break rules banning payment for rides.

Gett also has a somewhat different business model, focusing on striking deals with companies and organizations that use it as their sole cab provider and offering free Wi-Fi in their cabs to attract tourists itching for an Internet connection.

Uber’s muscular approach may yet help it make gains in the Israeli market. Even if it does not, it has shown no signs of slowing on the global stage; since its Tel Aviv launch, it has nearly doubled the number of cities it operates in to about 300.


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